At his confirmation hearing last week, Tom Wheeler, President Barack Obama’s choice to lead the Federal Communications Commission, was grilled on everything from his ties to the telecom industry to his stance on crucial broadband policy issues such as net neutrality.

Media ownership, once considered the agency’s bread-and-butter topic, was a notable exception until Sen. Maria Cantwell, D-Wash., voiced concern over newspaper publisher Gannett’s recent acquisition of Belo, a Dallas-based media company that owns 20 local TV stations across the country.

“So do you believe that making it easier for owners of daily newspapers to own television stations and radio stations in the same market will fix what is wrong with the newspaper industry? And is that the way we need to be going?” Cantwell asked.

“Senator, I understand the seriousness of this issue. And I have long been an advocate of diversity of voices,” Wheeler responded. “But I think you said the key thing: that when the commission looks at these issues — competition, localism and diversity are the issues that should be the touchstones. Not business plans.”

Wheeler’s opinion matters because the agency is again reviewing its rules restricting media ownership in local markets. Those rules were put in place to prevent one company from dominating local news by limiting how many broadcast stations one company may own and banning a single entity from owning both a daily newspaper and a broadcast station in the same market.

For years the broadcast and newspaper industries have lobbied the FCC to relax or eliminate the newspaper-broadcast rules, arguing they are no longer relevant in today’s marketplace where newspapers are struggling financially and allowing more cross-ownership may help them survive. Gannett President and CEO Gracia Martore noted that her company’s acquisition of Belo “will significantly improve our cash flow and financial strength.”

Former FCC Chairman Julius Genachowski floated a plan to relax cross-ownership only in the largest media markets earlier this year, but the prospect of fierce opposition from Congress and civil rights groups who want more diversity means any action to relax the media ownership rules is unlikely until the winter, if at all.

Similar proposals under the two previous FCC chairmen were rejected by the courts, which said while the FCC had done studies to examine the effect of the rules on localism and competition, it had failed to evaluate the effect on diversity of viewpoints or minority ownership.

Diversity a Lower Priority

For the civil rights advocates that have been critical of the FCC’s inattention to issues concerning minorities, this was further evidence that diversity is no longer a priority. When stakeholders requested such a study, they were told by staff that the FCC lacked the resources.

The Minority Media and Telecommunications Council, a group that promotes diversity in telecom policy issues and had opposed any relaxation of media ownership rules, volunteered to perform and pay for the study. Genachowski agreed to defer any action on the 2010 quadrennial review until after the report was released.

That happened earlier this month, but the results were a surprise to many. Although the survey got only 14 responses from minority and/or female-owned broadcast stations the author, BIA chief economist Mark Fratrik, found them largely unconcerned about competition from cross-ownership operations, with the exception of three stations in one medium-sized market with considerable consolidation.

“With respect to the newspaper rule, there have been profoundly changed circumstances,” said MMTC President David Honig, citing the closing of some major daily newspapers and the loss of 20 percent to 30 percent of the nation’s journalists in recent years.

“It may be that the public interest in having the maximum number of diverse voices could be offset by keeping newspapers alive and kicking, by having TV companies able to invest in them and keep them alive and afloat,” he said.

Honig said the study is not conclusive in and of itself, but he called it a “piece of evidence” the FCC can use to successfully complete its quadrennial review. The commission put the report out for a public comment period, which expires Aug. 6. Staff will likely take some time to sift through the various responses and deliberate before any action is taken.

So far, the comments from other groups that seek increased media diversity have been mixed, with some groups taking direct aim at the MMTC for backing a position favored by much of the media industry.

Free Press Policy Director Matt Wood said the reaction to the study has been overblown and that proponents of deregulation have used it to justify all forms of media consolidation.

“To conclude from basically the opinions of a handful of owners in a few markets that cross ownership is not a problem, is just a widely overbroad conclusion that the responses don’t support,” Wood said. “I still feel comfortable saying that all forms of concentration and ownership tend to hurt minority- and female-owned stations.”

FCC Action Unlikely

While the release of the report has negated the FCC’s official reason for delaying the 2010 quadrennial review, observers doubt any action is forthcoming.

Acting FCC Chairwoman Mignon Clyburn is a staunch advocate for minority and female media executives, having served in both those roles herself, but the political sensitivity of the issue could prevent her from moving forward.

The last two times the FCC has tried to relax the newspaper-broadcast rule, Congress moved quickly to express its disapproval.

If Clyburn does act before Wheeler’s confirmation, she is likely to move cautiously. Both Clyburn and Democratic Commissioner Jessica Rosenworcel have expressed serious concerns about the paucity of minority ownership in the broadcast industry and are unlikely to approve anything perceived as harming media diversity.

That leaves media policy on the back burner again. With no penalties in place for failing to complete the 2010 quadrennial review before 2014, the FCC may just choose to wait until next year to start the process again.

“This has been controversial for more than a decade, and it’s hard for them to dive ahead and answer all these questions considering where they left off,” Wood said. “We didn’t like it, the broadcasters didn’t like it, and seems like [Genachowski’s] attempt had very few fans on our side or from companies wanting consolidation. It’s hard for them to pick that up and move it through.”